Acuity v. Marion Glass and Mirror, Inc., Etal.

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ACUITY,
Plaintiff,
v.
MARION GLASS AND MIRROR, INC.,
Defendant.
Case No. 3:25-CV-00562-NJR
MEMORANDUM AND ORDER
ROSENSTENGEL, District Judge:
Pending before the Court is a Motion for Default Judgment filed by Plaintiff
Acuity. (Doc. 31). For the following reasons, the motion is granted.
B ACKGROUND
On 	April 	15, 	2025, 	Acuity, 	an 	insurance 	company, 	filed 	a 	Complaint 	for
Declaratory Judgment seeking a declaration that it does not owe a duty to defend or
indemnify its insured, Marion Glass and Mirror, Inc. (“Marion Glass”), with respect to a
Third-Party Complaint filed by Samron Midwest Contracting, Inc. (“Samron”) against
Marion Glass in Williamson County (“the underlying lawsuit”). See City of Marion v.
Basinger Architects, LLC, et al., Case No. 2023 LA 52 (Williamson Cty. Cir. Ct.); (Doc. 1-1).
The underlying lawsuit, filed in June 2023, seeks damages in connection with property
damage resulting from alleged faulty construction work performed by Samron and
Marion Glass at the City of Marion’s Community Recreational Center. (Doc. 1-1).
This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a). Plaintiff
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Acuity is a mutual insurance corporation organized under Wisconsin law, with its
principal place of business located in Sheboygan, Wisconsin; Defendant Marion Glass is
an Illinois corporation with its principal place of business in Marion, Illinois; and the
amount in controversy is alleged to exceed $75,000 exclusive of interest and costs.
(Doc. 1).
A. The Insurance Policy
This case concerns a commercial insurance policy (Policy No. ZH5256) issued by
Acuity to Marion Glass. The policy was effective from December 30, 2020, to December
30, 2021. Several provisions are relevant here. First, the policy included occurrence-based
Business Liability coverage. That portion of the policy provides:
1. Business Liability
a. We will pay those sums that the insured becomes legally obligated
to pay as damages because of bodily injury, property damage or personal and
advertising injury to which this insurance applies. We will have the right and
duty to defend the insured against any suit seeking those damages.
However, we will have no duty to defend the insured against any suit
seeking damages for bodily injury, property damage or personal and advertising
injury to which this insurance does not apply . . . .
b. This insurance applies:
(1) To bodily injury and property damage only if:
(a) The bodily injury or property damage is caused by an occurrence that
takes place in the coverage territory; and
(b) The bodily injury or property damage occurs during the policy
period.
(c) Prior to the policy period, no insured listed under item 1 of Who
Is An Insured and no employee authorized by you to give or receive notice
of an occurrence or claim, knew that the bodily injury or property damage had
occurred, in whole or in part. If such a listed insured or authorized employee
knew, prior to the policy period, that the bodily injury or property damage
occurred, then any continuation, change or resumption of such bodily injury
or property damage during or after the policy period will be deemed to have
been known before the policy period.
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(Doc. 1-3 p. 62).
Second, the policy includes contractor Errors and Omissions coverage:
1. 	Insuring Agreement
a. 	We will pay those sums that the insured becomes legally obligated to
pay as damages because of a wrongful act to which this insurance
applies. We will also pay those sums that the insured becomes legally
obligated to pay as recall expenses only if the recall expense arises out of
property damage to your product, property damage to or any part thereof.
The recall expenses must have resulted from the insured's wrongful act.
We will have the right and duty to defend the insured against any suit
seeking damages or recall expenses to which this insurance applies.
However, we will have no duty to defend the insured against any suit
seeking damages for a wrongful act or recall expenses to which this
insurance does not apply. We may at our discretion investigate any
wrongful act or recall expense and settle any claim or suit that may result
from a wrongful act or recall expense . . . .
b. 	This insurance applies only if: . . .
(2) The:
(a) Wrongful act occurs; or
(b) The product recall is initiated;
on or after the Retroactive Date shown in the Declarations and prior to
the end of the policy period; . . .
(3) Prior to the original inception date of continuous coverage under
Contractors Errors and Omissions Broad Coverage Part no insured had
knowledge of:
(a) A wrongful act or any resulting claim or suit, or
(b) Any suspected wrongful act which would result, or could have
reasonably been expected to result in a claim or suit, which the insured
had not reported to us as required by paragraph 2, Duties in the Event
of a Wrongful Act, Product Recall, Claim or Suit under Section V,
Conditions 	or 	paragraph 	6, 	Representations, 	under 	Section 	V
Conditions;
whether or not any notice of such wrongful act, claim or suit was furnished
to any other insurer; and
(4) A claim is first made against any insured, in accordance with paragraph
c below, during the policy period or during any Extended Reporting Period
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we provide under Section VI – Extended Reporting Periods. . . .
(Id. at p. 152). The Errors and Omissions coverage also provides that “[t]his insurance
does not apply to claims or damages if the wrongful act out of which the claim or damage
arose or the product recall commences before” December 30, 2020. (Id. at p. 148).
Marion Glass also purchased Commercial Excess Liability coverage, which
provided as follows:
1. Insuring Agreement
a. We will pay those sums, in excess of the amount payable under
the terms of any underlying insurance, that the insured becomes
legally obligated to pay as damages because of injury or damage to
which this insurance applies, provided that the underlying insurance
also applies, or would apply but for the exhaustion of its applicable
Limits of Insurance . . . .
(Id. at p. 6). “Underlying insurance” is defined by reference to listing of policies in the
package’s “Schedule of Underlying Insurance.” (Id. at p. 11). That schedule lists only an
Automobile Liability policy, an Employers’ Liability policy, and the Business Liability
policy discussed above. (Id. at p. 4).
B. The Underlying Litigation
In June 2023, the City of Marion, Illinois, filed a lawsuit in state court against
several entities, including Samron, who were involved in the construction of the
community’s natatorium. According to the City’s complaint, construction began in July
2013 and was substantially completed in March 2015. Compl. ¶ 11. In the summer and
fall of 2015, the natatorium “began exhibiting excessive condensation and corrosion and
degradation to its steel structure and components.” Id. ¶ 13. The City alleged that these
issues arose in part from Samron’s faulty work. Id. ¶ 14.
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Samron then filed a third-party complaint in the underlying lawsuit against
Marion Glass. Id. ¶ 15. It alleges that it contracted with Marion Glass for work on the
natatorium project in 2013, but the work was faulty. Id. ¶¶ 16-17. Samron pleaded claims
for contractual indemnity and breach of contract. Id. ¶ 17.
On 	November 	20, 	2024, 	Marion 	Glass 	tendered 	a 	claim 	for 	defense 	and
indemnification to Acuity based on the third-party complaint. Id. ¶ 18. Acuity denied the
tender on December 11, 2024. Id. ¶ 19. It requested that Marion Glass concede the denial,
but Marion Glass has not done so. Id.
C. Procedural History
Acuity filed a complaint in this Court on April 15, 2025, seeking a declaratory
judgment that it does not have a duty to defend or indemnify Marion Glass with respect
to Samron’s third-party complaint pending in state court. Acuity named both Marion
Glass and Samron as defendants.
Samron was served and promptly was dismissed from the case pursuant to
Federal Rule of Civil Procedure 41(a). (Doc. 30). On June 25, 2025, Marion Glass was
served with the summons and complaint by the Williamson County Sheriff’s Office.
(Doc. 19). Marion Glass did not timely answer or respond to the complaint, so on Acuity’s
request the Clerk of Court entered its default on July 30, 2025. (Doc. 25). On September
23, 2025, Acuity filed a motion for the entry of a default judgment against Marion Glass,
which it also mailed to Marion Glass’s registered agent. (Docs. 31, 32).
LEGAL STANDARD
Rule 55(a) requires the clerk to enter default when a party against whom a
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judgment for affirmative relief is sought has failed to plead or otherwise defend and that
failure is shown by affidavit or otherwise. Fed. R. Civ. P. 55(a). The clerk’s entry of a
default “is merely a formal matter and does not constitute entry of a judgment.”
10A Wright & Miller’s Federal Practice and Procedure § 2682 (4th ed.). “Once the default
is established, and thus liability, the plaintiff still must establish his entitlement to the
relief he seeks.” VLM Food Trading Int’l, Inc. v. Illinois Trading Co., 811 F.3d 247, 255 (7th
Cir. 2016) (quoting In re Catt, 368 F.3d 789, 793 (7th Cir. 2004)). “When ruling on a motion
for default judgment, the Court “must accept as true all factual allegations in the
complaint, except those regarding the amount of damages.” Arwa Chiropractic, P.C. v.
Med-Care Diabetic & Med. Supplies, Inc., 961 F.3d 942, 948 (7th Cir. 2020). “Even after
default, however, it remains for the court to consider whether the unchallenged facts
constitute a legitimate cause of action, since a party in default does not admit conclusions
of law.” See 10A Wright & Miller’s Federal Practice and Procedure § 2688.1 (4th ed.).
DISCUSSION
Acuity argues that the well-pleaded facts make clear that it has no duty to Marion
Glass under the insurance policy’s Business Liability coverage, Errors and Omissions
coverage, or the Commercial Excess Liability coverage. The Court agrees.
Start with some first principles. As contracts, insurance policies are assessed using
ordinary principles of contract interpretation. Hobbs v. Hartford Ins. Co. of the Midwest,
214 Ill. 2d 11, 17, 823 N.E.2d 561, 564 (2005); see also Old Guard Ins. Co. v. Riverway Prop.
Mgmt., LLC, No. 23-01098, 2024 WL 4112781, at *4 (C.D. Ill. Sept. 6, 2024). A court’s
“primary objective is to ascertain and give effect to the intention of the parties, as
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expressed in the policy language.” Hobbs, 214 Ill. 2d at 17, 823 N.E.2d at 564 (citing
American States Ins. Co. v. Koloms, 177 Ill. 2d 473, 479, 687 N.E.2d 72 (1997)).
Illinois law provides that “the insurer’s duty to defend arises when ‘the facts
alleged in the underlying complaint fall within, or potentially within, the policy’s
provisions.’” Berkley Ins. Co. v. Caraway, No. 24-256, 2025 WL 3280220, at *5 (S.D. Ill. Nov.
25, 2025) (quoting Mkt. St. Bancshares, Inc. v. Fed. Ins. Co., 962 F.3d 947, 951–52 (7th Cir.
2020)). An insurer’s duty to defend is broader than its duty to indemnify. See Bartkowiak
v. Underwriters at Lloyd’s, London, 2015 IL App (1st) 133549, ¶ 20, 39 N.E.3d 176, 181 (Ill.
App. Ct. 2015). For that reason, the duty “arises not just when the allegations of the
underlying complaint “‘fall within . . . the policy’s coverage,’ but also when those
allegations ‘potentially’ fall within that coverage.” Great Am. Ins. Co. v. State Farm Fire &
Cas. Co., 104 F.4th 1011, 1018 (7th Cir. 2024) (quoting Outboard Marine Corp. v. Liberty Mut.
Ins. Co., 154 Ill.2d 90, 108, 607 N.E.2d 1204, 1212 (1992)). Furthermore, provisions in
insurance policies that limit coverage are to be “interpreted liberally in favor of the
insured and against the insurer.” Koloms, 177 Ill. 2d at 479, 687 N.E.2d at 75.
Acuity bases its claim for declaratory relief on three provisions of the insurance
policy. First, the Business Liability coverage required Acuity to “pay those sums that the
insured becomes legally obligated to pay as damages because of bodily injury, property
damage or personal and advertising injury to which this insurance applies.” (Doc. 1-3 p. 62).
The provision likewise required Acuity to “defend the insured against any suit seeking
those damages.” (Id.). However, this provision applies “only if . . . [t]he bodily injury or
property damage occurs during the policy period” and prior to the policy period “no
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insured listed under item 1 of Who Is An Insured and no employee authorized by you to
give or receive notice of an occurrence or claim, knew that the bodily injury or property
damage had occurred, in whole or in part.” (Id.). Here, the policy became effective on
December 30, 2020. (Id. at p. 3).
Accepting as true the facts pleaded by Acuity, it is apparent none of the property
damage alleged by the City in the underlying lawsuit occurred during the policy period.
The City’s complaint described degradation to the natatorium’s steel stricture beginning
in Summer/Fall 2015, and the third-party complaint by Samron brings causes of action
against Marion Glass related to that damage. (Doc. 1 ¶ 29). Marion Glass informed Acuity
that it had completed its work on the project by February 25, 2015. (Id. ¶ 32).
Even if the damage began or continued into the coverage period in December 2020,
Acuity would not be under any duty to defend or indemnify Marion Glass because that
damage would have been a known loss. The policy makes coverage contingent on
whether the insured knew prior to the coverage period that “property damage had
occurred, in whole or in part.” (Doc. 1-3 p. 62). In its motion, Acuity argues that Marion
Glass knew of any property damage when it purchased the insurance, so the loss
therefore is uninsurable. For that proposition, it refers to paragraph 33 of its complaint,
which states that “as of 2017, there were no issues with the windows installed by Marion
Glass meaning that no damage occurred to the windows or that any such damage had
already occurred and been remediated and, therefore, the alleged property damage did
not occur during the Acuity policy period.” (Doc. 1 ¶ 33). That allegation does not negate
the possibility that Marion Glass did not know about any continuing property damage
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when it purchased the insurance. More relevant to that question is paragraph 36, which
states in relevant part that “even if the alleged property damage continued from when it
was discovered in 2015 into the Acuity policy period incepting on December 30, 2020,
any such damage would be considered a known loss discovered prior to the initial policy
period.” (Id. ¶ 36). Although the Court cannot accept as true the allegation’s legal
conclusion that the damage was a known loss under the policy, the Court can accept that
the damage was “discovered prior to the initial policy period.” (Id.). Acuity therefore has
established that it has no duty to Marion Glass under the Business Liability coverage.
Next, Acuity avers that it has no duty to defend or indemnify Marion Glass under
the policy’s Errors and Omissions coverage. That provision “applies only if” the
“[w]rongful act occurs . . . on or after the Retroactive Date shown in the Declarations.”
(Doc. 1-3 p. 152). The retroactive date is December 30, 2020. (Id. at p. 149). For the reasons
previously discussed, any claim regarding damage to the City’s natatorium arose before
that date. Acuity therefore has established that it has no duty to defend or indemnify
Marion Glass under the Errors and Omissions coverage.
Finally, Acuity denies that it owes any duty to Marion Glass under the policy’s
Commercial Excess Liability coverage. In that portion of the policy, Acuity agreed to “pay
those sums, in excess of the amount payable under the terms of any underlying insurance,
that the insured becomes legally obligated to pay . . . provided that the underlying
insurance also applies . . . .” (Doc. 1-3 p. 6). “Underlying insurance” is defined by reference
to a listing of policies set out in a “Schedule of Underlying Insurance.” (Id. at p. 11). That
schedule lists only an Automobile Liability policy, an Employers’ Liability policy, and
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the Business Liability policy (discussed above). (Id. at p. 4).
Acuity’s duties under the Commercial Excess provisions are tied to whether
another policy also is applicable. The Automobile Liability policy and the Employers’
Liability policy clearly are irrelevant to the property damage alleged in the underlying
complaint, and the Business Liability policy does not trigger a duty to defend or
indemnify for the reasons previously mentioned. Acuity therefore has no duty to defend
or indemnify under the terms of the Commercial Excess coverage.
CONCLUSION
Accordingly, it is ORDERED that Acuity’s Motion for Entry of Default Judgment
(Doc. 31) is GRANTED. The Clerk of Court is DIRECTED to enter judgment as follows:
Acuity owes no duty to defend or indemnify Marion Glass under the
Business Liability, Errors and Omissions, or Commercial Excess Liability
coverage provisions of Policy No. ZH5256 with respect to the underlying
litigation among the City of Marion, Samron, and Marion Glass, styled The
City of Marion v. Baysinger Architects, LLC et al, Case No. 2023 LA 52, pending
in the Circuit Court for Williamson County, Illinois.
It is further ORDERED that the Clerk of Court shall CLOSE this case upon entry
of the judgment.
IT IS SO ORDERED.
DATED: 	February 18, 2026
____________________________
NANCY J. ROSENSTENGEL
United States District Judge
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